How is resale adapting in the age of e-commerce?

Source: S Jones

Dan McCombie is a Research Associate at Larisa Ortiz Associates

In my recent experience I keep observing a recurring theme: industrial neighborhoods with concentrations of second-hand furniture and antiques merchants. Another recurring theme is that these neighborhoods are changing from being predominantly industrial to mixed-use neighborhoods and people are concerned that this will eventually displace these merchants. Is there a way they might they be retained?

I’ve learned that antiques are one of those retail categories very amenable to creating niche districts. As observed in these neighborhoods, when they congregate in the same place it can have a powerful magnet effect. In my opinion, therein lies the opportunity to both retain the unique character of the neighborhood while also cultivating a successful shopping district. But that argument may be hard to make if those merchants are struggling to remain competitive. This prompted me to ask some questions. Are they actually competitive? More broadly, are resale merchants subject to the same competitive pressures as traditional retailers in the face of e-commerce giants like Amazon? If so, what are some recommendations that might be made? In my investigations of these questions I uncovered what I consider some best practices in the second-hand apparel industry that may (potentially) be applied to these antiques merchants.

Why look at second-hand apparel?

Photo credit: Jon Fravel

Because an antiquing excursion and a trip to the thrift store share similar qualities.  Both are high-touch and experiential in their basest senses. They’re high-touch because the customer is able to literally reach out and touch the raw products, free of packaging, feeling the texture of the fabric or the grain of the wood. They’re experiential because of the excitement associated with the hunt, so to speak. You and the other customers are engaged in a tragedy-of-the-commons scenario such that if you buy this particular Tiffany-style accent lamp or this vintage levis denim jacket, I cannot. Nor can the sales associate put in an order for another to be shipped to the store (read: you win, I lose). Maybe the allure is also in the speculation—the possibility that any of these items is worth well over the price on the label. Maybe that Tiffany-style lamp is actually a veritable original. Then the shopping experience is elevated into an exercise of your consumer savviness and treasure-hunting prowess.   

This might prompt us to surmise that brick and mortar thrift stores and antique merchants are immune to the encroachment of e-commerce in our rapidly changing retail landscape. Sure, margins can be low. But Amazon doesn’t have the capacity or willingness to sort through mountains of consigned garments and so they don't pose any real threat to the thrift store business model. 

Then why change?

Because even though Amazon isn't selling used apparel, other e-commerce disruptors have figured out that the hunt for pre-owned treasures is easily reproduced in the digital marketplace. In a Forbes article by Richard Kestenbaum, he details how Millenial spending patterns are partially responsible for unprecedented growth in resale. Traditional brick-and-mortar thrift stores are growing by 8% per year while the online resale market is growing by 35% per year, 17 times faster than the overall market for apparel. In his explanation, he points specifically to the growing popularity of internet clothing consignment stores like thredUP, a company that describes itself as “the world’s largest online marketplace to buy and sell women’s and kids’ secondhand clothes,” thereby tapping into an $18BN apparel resale industry that is expected to grow to $33BN by 2021.

In a report on their website, thredUP claims the “fun factor” of the resale market explains their success against pervasive “retail boredom.” Shoppers can sit on their couch with their dog, drink wine, and scroll through similar offerings that they would find at off-price retailers like Marshalls, TJMaxx, and Nordstrom Rack for a fraction of the price. Millennial shoppers are also highly motivated by the eco-conscious associations of buying resale, assuming second-hand is more sustainable for the environment. It also means discretionary income is not as significant a limitation as some might think. But thredUP states that Millennials are not the only target demographic. A significant share of shoppers come from the 65+ age cohort, suggesting that a recession-era mindset drives them towards value-oriented spending too.

How can brick-and-mortars compete?

One strategy we’ve mentioned in the past is adopting an omni-channel retail strategy that utilizes the best of both the physical and digital worlds. But how does a merchant make sure their constantly changing inventory is seamlessly represented on the website when sales are also happening at the counter? How do they leverage their websites in a way that actually yields more trips to the store? To answer this I point to several different strategies being employed by apparel thrift stores here in Brooklyn.

Beacon's Closet in Williamsburg, BK
Source: Jennifer Yin

1. Beacon’s Closet has 4 different locations across Brooklyn and Manhattan. Each store has a sizable and constantly changing inventory, meaning maintaining an online directory of products is challenging. However, a visit to their website evidences an online marketplace with a carefully curated selection. The listing is not comprehensive, but what is offered is beautifully staged with multiple photographs of the product and informative descriptions. They even give each individual product its own unique nickname in an effort to cultivate a sense of rare exclusivity. Items are also marketed through their Instagram account, contextualizing them in a way the staged photographs do not.     

2. Maeven is a boutique thrift store started in 2012 by Amy Yee, who had spent the 12 years prior buying and selling vintage clothes on eBay and Etsy. This eventually became profitable enough for her to open up a studio-space in Brooklyn in order to “provide a better shopping experience for her customers.” Maeven resembles that class of click-and-mortars like Warby Parker and Bonobos who have managed to leverage physical locations out of digital success. In spite of this, Amy continues to employ a combination of channels that include her studio space, pop-ups, her website, and the initial online marketplaces that brought her success in a multi-pronged approach to customer engagement  

3. Buffalo Exchange is a company with 49 stores across 20 states. I’ve visited locations in both DC and New York, and noticed large constantly-changing physical inventories in each of them. This seems to explain why they haven’t created an option to order their clothes via their website. But something they have implemented is the ability to sell your clothes to them by mail, requesting a mailbag online and having it sent directly to your home. You can then fill the bag at your leisure and return it to them when you’re ready. They then give you the choice of receiving a paper check, PayPal payout, or in-store credit. By making the selling process more seamless, the store is able to create more opportunities to encourage customer visitation.

What does this have to do with antiques?

Admittedly, I still don’t know whether or not brick-and-mortar antiques are losing substantial market share to e-commerce disruptors in the same manner as the apparel industry. My main point here is that resale is inherently high-touch and experiential, yet e-commerce companies are figuring out new ways to emulate these qualities through their websites and apps. Brick-and-mortar antique retailers would do well to take note of how this is being done and act in kind. If not for fear of losing market share at the macro level, then to take advantage of these lessons to be better positioned at the micro. To summarize, here is what actions are being taken by second-hand apparel retailers which I believe can be replied to others in the business of resale:

1. Establish an on-line marketplace for your products if one doesn’t already exist. If maintaining accurate inventories is challenging, prioritize your offerings and highlight what’s special about what you’ve selected. If you’re a consigner, explore ways it can aid in the appraisal and selling process in order to encourage more in-store visitation and robust inventories. 

2. Consider other ways your website can further engage your clientele. Utilize social media platforms like Instagram to contextualize your products in ways your website does not. Create a blog discussing interesting trends and rare finds while providing personable anecdotes. Paint a picture for the customer whenever possible that showcases your unique brand to them.

3. Recognize changing trends in consumer demand. Are your customers motivated by eco-conscious spending options? Are they bargain-seeking? Or are they simply in it for that chance to find something rare and exclusive? Have you taken the time to look around your neighborhood? Who lives there? Who is patronizing businesses near yours? Use these clues to inform your approach and the way you present your offerings. There could be untapped demand you haven’t seen yet.

This investigation started because I wanted to think about how a cluster of antique stores might remain in their neighborhood despite development pressures that could feasibly displace them. What it turned into was a larger question of whether resale merchants are threatened by the growth of e-commerce. If that feels at all deceptive, I apologize for that. I mean only to emphasize that in exploring what constitutes a robust shopping district, we should leave no stone unturned in our investigations. Having done that, we can create more effective recommendations for future growth.  

Will Amazon Prime Restaurant kill the dining industry?

In 2015, Amazon started its slow roll out of Amazon Prime Restaurant in Seattle. Its food delivery service is unlike that of startup giants such as Grubhub and UberEats. The service has since quickly spread across a few markets including Dallas, San Francisco, Los Angeles, Chicago, San Diego, Austin, Atlanta, Miami, Baltimore, Portland, and of course New York City.

If you’re an Amazon Prime member in any one of these markets (and it’s highly likely you are since Consumer Intelligence Research Partners estimated over 63 million Prime members in 2016), then 1-hour food delivery service is available to you with no delivery fee.

Furthermore, Amazon Prime Restaurants boasts only the best, quality local restaurants on its platform and claims to be assisting small businesses that have never entered home delivery services to finally enter the online delivery market. I was surprised myself when I finally opened Amazon Prime Restaurant on my couch last night and found Aita Trattoria on the list of restaurants delivering to my address. Aita’s is a local Italian restaurant in Clinton Hill, Brooklyn widely known for fresh, seasonal ingredients – which makes it quite the neighborhood dinner destination. I’ve lived in Brooklyn for almost four years now and have never been able to get a table without waiting 40 minutes so to find out that I can simply just click a button to order their delicious bucatini and wait in the comforts of my home was simply astounding. Furthermore, once an order has been placed, a nifty little feature on Amazon Restaurants allows you to track your delivery on a real time map so you’re not waiting cluelessly on your couch.

This discovery, while exciting, also led to me to worry around what this latest proliferation of Amazon’s services might do to the foot traffic in commercial corridors, and consequently the dining industry. Especially restaurants in neighborhood commercial corridors that mainly rely on local residents to eat out on weekends and weekday nights. After all, many of today’s commercial districts continue to be anchored by food and drinking places. Amazon, without even accounting for Amazon Restaurants and its sales, has already led to some decline in overall foot traffic. In fact, foot traffic fell by 32 percent among users of the Amazon App according to research firm Sense360, who also claim it’s been two full years since restaurants could report a decent traffic month.

Sure, restaurants still make up 15 percent of all retail sales and the expenditure data shows that U.S. consumers are spending more on dining in restaurants than on buying groceries but how much of these sales are actually made in person at the restaurant versus made online on the couch via Grubhub or Ubereats or Amazon Restaurants? Also, if the National Restaurant Association surveys are right and 8 in 10 consumers are dining out due to perceptions of convenience from not having to cook or clean up, then ordering more food online to be delivered within an hour to our doorstep would certainly fit the convenience criteria – especially if friends and family already live nearby and if the weather is bad outside. (I was certainly not going out to dinner last Saturday while the summer storms were in full swing.)

The proliferation of online delivery services for restaurants also means that the industry’s profit margins are getting smaller and smaller. As it is, real estate, labor and taxes already make up some of the largest share of operating a restaurant. Now, businesses will also have to worry about being charged by Amazon to deliver their food to stay-at-home customers. As Amazon has pledged not to mark up the cost of menu items, it is instead shifting the burden to restaurants in the form of an undisclosed percent charge of each order. Of course we already knew this – Grubhub, Postmates and Seamless all charge restaurants roughly 12-24 percent of checks to use their delivery services, however, Amazon is reportedly taking 27.5 percent of checks from partnered restaurants.

So while Amazon aims to keep the gap between diners’ cost of buying groceries and ‘restaurant dining’ minimal, small restaurants and eateries will bear the brunt of the costs with smaller profit margins and fewer people walking into their establishments and their neighbors’.

Fake News - Retail is not dead!

This past weekend we had the privilege of attending the National Planning Conference at the Javits Center here in New York City. There were over 600 sessions, discussions, and mobile workshops on topics ranging from retail and downtown revitalization to short term rentals and agricultural tourism. A theme that seemed to permeate many of these discussions was one of continued strength and adaptations in brick-and-mortar retail. City officials, architects, market consultants, and planners at various panels resoundingly agreed that retail was not dead in their communities, or in communities they were working for, and that there are still steps to take to support its growth. We've all read the recent reports on large national retailers like Macy's pulling back on storefronts and abandoning suburban shopping malls. However, this calamitous picture being painted in the media of retail's impending doom seems to be clouding the realities on the ground. As Steve Dwoskin, Vice President of Callison RTKL, aptly said in his session on The Reality of Planning for Retail, "It's Fake News".

Retail Trends
There are so many ways that retailers today are adapting to changing consumer trends and habits in order to sustain growth. At the same session, Kate Coburn a partner at HR&A, explained the importance of understanding the changing shopper demographics across the country and using that to retail's advantage. Millennials, as many of us know, currently make up the biggest proportion of the population with over 92 million of them here in the U.S. This group, combined with the growing Generation X-ers, are the shoppers that retailers need to watch and adapt accordingly to. More importantly, there is also a growing Hispanic and Asian population here in America that needs to be accounted for in retail market strategies and downtown retail tenant mix. Not to forget the high rates of urbanization that are also forcing retailers to rethink configurations of properties, store formats, and partnerships.

Here are some ways in which retailers, downtown organizations, and developers are adapting to these dynamic consumer trends:

1. Reconfiguring properties from single purpose malls to mixed use developments in more urban and transit-served areas
2. Changing store sizes and formats to fit downtown main streets rather than suburbs
3. Repositioning and retenanting resulting in many developments shifting reliance on department store anchors to entertainment and dining anchors
4. Focusing on experiential retail as a result of growing e-commerce competition
5. Targeting localized tenants that cater to diverse demographics in different localities
6. Using multimedia strategies and moving from traditional media to social media advertising

Ikea was an example of a retailer that has been seen to adapt to its changing consumer habits. Its original 400,000 SF model has since been shrunk to 100,000 SF stores in order to be able to fit into more urban places. Its aim was to "bring the Ikea home furnishing range and expertise closer to customers" who lived in urbanized areas. Although these smaller formats are not able to carry full product ranges, customers are still able to order from the Ikea online range for collection at dedicated collection points of smaller format stores - similar to Target's fulfillment centers that we wrote about last week. It's important to acknowledge, however, that furniture is one of few retail categories that has fortunately been less vulnerable to e-commerce. Make-up/ cosmetics, services like hairdressers and laundromats, and restaurants are some other categories that continue to thrive despite the growing shift toward online shopping because they all require in-store product experience and demonstrations before consumers are able to make purchases. Likewise, local businesses that offer authentic experiences are becoming most valuable in today's retail climate. 

What cities can do to create a supportive system for all types of retail to thrive

1. Provide appropriate spaces for retail
• Cities can often provide tax incentives to landlords and property owners so that they may renovate and provide viable retail spaces. In our work, we 've often seen downtowns struggle with high ground floor vacancy rates and yet long lists of potential tenants. This is often the case because tenants and small businesses do not have the capital to rehabilitate and fix up the vacant spaces in order to make them viable for business
2. Be strategic about co-tenancies
• A block-by-block tenanting strategy should be developed by merchants associations or downtown organizations in order to effectively cater to communities living in surrounding neighborhoods and also to increase retail diversity
• Curating retail mix can only be effective when property owners are involved in the strategizing. However, this often requires that cities provide financial incentives for them to be active in such discussions.
3. Grow customer base close to retail corridors
• Provide diverse housing options that meet full range of household incomes needed to support a variety of retail
• Encourage flexible spaces of employment (office and manufacturing) near retail corridors that encourage strong daytime worker populations with a range of income and interests
4. Right-size parking and vehicular areas
• With the increasing use of shared car services like Uber and Lyft, and with retail moving to urban places, parking requirements no longer hold the same weight as they did. Retailers in urban areas are instead seeing the need for drop-off areas more so than large swathes of parking. Some downtowns are even revisiting parking requirements for retail uses given the changing environment.

Ways to support small businesses through zoning
More specifically, zoning can be an effective tool in supporting the growth of retailers and small businesses. A panel discussion opened by Arista Strungys, Firm Principal at Camiros, Ltd, dived into some tried and tested zoning modifications and tools that have lowered barriers to entry for businesses. The session cautioned municipalities about out-of-date use structures that were often the biggest barriers to small businesses thriving downtown. According to the panel, building flexibility into zoning and land use ordinances is key to supporting small businesses, including retail. This flexibility can be achieved by establishing a generic use approach rather than specific use approach and also tailoring uses to different districts. The former encourages readability of the ordinance by eliminating pages and pages of descriptions that outline every specific use allowed. Instead of listing retail categories such as 'Clothing Stores' or 'Book Stores', the ordinance simply says 'Retail Goods Establishments' to build in flexibility for allowed uses. Tailoring uses to districts, on the other hand, is best represented in a 'Uses Matrix' like the one below. This approach also encourages readability of the ordinance and eliminates the cumulative structure of traditional ordinances.

Eastern Neighborhoods Zoning Guide - Sample Use Matrix

Finally, monitoring new types of uses is also key to being flexible for businesses. Robert Azar, Deputy Director of the Department of Planning and Development for the City of Providence, Rhode Island showed how his City was encouraging small businesses by introducing newer use types in the ordinance including Residential-Commercial/ Residential-Professional uses that encourages live-work spaces downtown. By doing so, the City is using these new permitted types as a calling card for itself - inviting newer types of businesses downtown such as micro craft breweries and specialty food producers and retailers.

For all the news articles and media bombardment of brick-and-mortar retail declining, there is also a strong movement at local levels to grow retail in dense, urban areas through a myriad of financial and regulatory tools. If your town or city is also doing something innovative to adapt to the changing retail trends and consumer habits, let us know! Get in touch at info@larisaortizassociates.com

The Future of Retail Panel – LOA Takeaways

This morning I had the pleasure to attend a panel of retail and real estate experts organized by the Commercial Observer here in New York City on the future of retail.  Panelists included Gene Spiegelman, Vice Chairman of Retail Services for Cushman and Wakefield, Isaac Chera, Principal of Crown Acquisitions, Susan Fine, Principal of Oases RE and Ryan Engel, Director of Business Development and Real Estate for Peloton. Below are our main takeaways:

How much is e-commerce affecting retail?

• E-commerce has continued to capture a growing share to total retail sales (it has expanded from less than 5% in 2009 to over 10% last year).
• The continuous growth of e-commerce has affected real demand for retail space. Thus, as retail rents were rising in past few years, demand for retail space was decreasing due in part to increasing online sales. Supply and demand for space are not following the typical curve due to new technological disruptions on how people shop.
• Retailers that are in trouble now were already in trouble before; e-commerce is just accelerating that process (e.g. Macys, Sears)
• In this context, an increasing number of retailers are seeing retail space (bricks and mortar) as a showroom and marketing platform where customers can try and interact with the products and brand and then order online.  Strong concepts like Apple Store, Bonobos, Warby Parker and Peloton illustrate the trend.
• Also, in this current retail landscape we tend to see the number of service businesses go up (personal care, food and dining) and leases for retail businesses tend to get shorter

Will retail rents go down?

• There is a lot of space in the market now and since demand for space is not following the typical supply and demand curve, rents will likely go down in a few areas; in NYC this will happen in SoHo, the Meatpacking District and some sections of Madison Avenue. Overall, according to panelists, rents will remain flat for a few years.
• Despite higher vacancy rates panelists are “cautiously optimist”.  According to them, the online trend is not sustainable: “there’s only so much UPS and delivery traffic the City can accommodate”… “Stores are still the best way to distribute to the customer”.

What’s next for retailers? What are the next trends?

• Despite growing of e-commerce, a number of existing retailers are quickly adapting and many interesting retail concepts emerging (as mentioned above, Apple, Bonobos, Warby Parker and Peloton).
• Panelists expect to see more online companies (large and small) opening bricks and mortar locations, especially in short term leases, pop-ups, etc.
• The stores that are (and will continue to) succeed have a strong focus on providing not only strong products, but an incredible service. For example, Starbucks has over 700 stores in Manhattan alone and their service accounts for a large portion of that success.
• Retail experience will be increasingly curated to each individual customer. For example, the new Amazon bookstores resemble a traditional bookstore, but uses online data to suggest additional books based on customers shopping and browsing histories.
• Big data is the next ‘thing’; increasingly retailers are using it to connect to consumers and personalize offerings. Panelists observed the retail industry is doing a better job at capturing and using big data than real estate: “there’s so much data out there and we haven’t figured out how to put it together yet”.

Retail Insights: Does the growth in on-line retailing spell doom for downtown? And what can you do about it?

Last year e-commerce sales hit $343 billion - that is triple the figure it was just ten years ago. Upon hearing this, many cities and towns across the country have started scrambling to address the issue. But like most complicated issues, the challenge from e-commerce is more nuanced than that $343 billion dollar figure suggests. For example, Amazon.com, the largest on-line retailer in the market, comprises a mere 1.4% of all retail sales. And according to a report by Mckinsey & Co., only 35% of Amazon's customers transactions are fulfilled by Amazon itself. That means that the balance, or 65% of all Amazon sales are derived from third party sellers. Another issue with the figures is that they reflect sales from BOTH pure-play Internet retailers AND bricks-and-mortar retailers who are selling on-line. When we dig further, pure-play Internet sales likely represent only about 3% of total sales, according to a report by the International Council of Shopping Centers.

This does not mean that our Main Street businesses are out of the woods. Mckinsey estimates that some retailers will see a decline in in-store sales by 5-7% a year. Others in the industry suggest the impact will be as high as 10-15% of sales. For a small business, really for any business, that is the difference between paying rent and shutting down. Businesses will also face pressure from shoppers who can quickly and easily compare prices - often while they are in the store - and elect to spend their dollars elsewhere if they find a better price. But the cards are not all stacked against smaller merchants. High-touch items (like apparel) and experiential activities (like dining), continue to drive customers to physical stores. And a shopper that is in a store is much more likely to purchase something - even at a slightly higher price point - because the inconvenience and time cost associated with going elsewhere may not be worth it.

So, are customers changing the way they shop? Absolutely. Will there by casualties among brick and mortar retailers who don't keep up? Without a doubt (see Sports Authority and Aeropostale). But the line between virtual and actual stores will become blurrier over time, not more divided. Experts suggest that E-tailers are outgrowing their digital footprint and seeking space in the real world because they know that giving customers the opportunity to see and touch merchandise is critical to sales. Consider Modcloth, a on-line only retailer who recently opened a store in Pioneer Place in Portland, Oregon. Or Fabletics, Blue Nile, Birchbox, Amazon, Bonobos, Warby Parker, Peleton, etc...all of which have opened physical stores. This doesn't always mean they sign long-term leases for traditional retail space - in some cases kiosks or pop-up stores help bridge the gap between an on-line seller and a brick and mortar presence. Amazon, for instance, has set up 16 pop-up shops around the country that allow people to test products and services and has indicated plan to open as many as 400 brick-and-mortar stores. According to GGP CEO Sandeep Mathrani, 60% of venture capital money being raised today is focused on bricks-and-mortar store.

If we can understand why e-tailers are opening bricks and mortar stores, we can begin to understand the opportunities inherent in a physical location. These include higher conversation rates among customers, i.e. the likelihood that someone who walks into your store will buy something. E-tailers  also recognize the power of brand awareness. "Thousands and thousands of customers have discovered us through Nordstrom" Bonobos CEO Andy Dunn told Bloomberg journalists in February, going on to say, "we view is as a way to reach a much more diverse audience much more quickly."

Here are a few others things to be on the look out for as e-commerce changes the way people shop...

Demand for smaller space will rise
Another opportunity is the potential reduction of physical square footage necessary for traditional big-box retailers. Consider Target's aggressive growth of the "CityTarget" brand. Customers can purchase from Target and arrange for store pickup - effectively making the target a fulfillment center/warehouse right in the middle of the commercial district. Consider Target's new store planned for Central Square in Cambridge, MA. It will consist of a mere 21,000 sf of space on two levels (paltry compared to the average target store of 135,000 sf).

Businesses will need to invest in omni-channel sales 
As e-commerce grows, small businesses will need to get in on the action. Businesses looking to participate in the on-line sales game have a few options. In a previous post, we described a few ways in which businesses can sell through established venues (like Etsy or Amazon) as well as a few tools that allow them to create their own websites. BID's and City's can help support the growth on omni-channel selling by providing training and technical assistance to businesses.

Small businesses will begin to incorporate home delivery
Local businesses are already in the community, and with some investment in delivery, can serve as mini-fulfillment centers as well. The benefit is that if something goes wrong, the customer knows precisely where to go and who to talk to to remedy a situation.

An omni-channel sales effort will cannot end with the launch of a website
Putting a website up cannot be the end all be all. Without clever marketing, especially on on-line platforms and social media sites, efforts to sell on-line can fall flat without the right follow through. This is where many businesses falter - they may not have the staff or resources to maintain and build an on-line presence. Many small business owners are just trying to run their business. We posit that this is where a supportive organization - like a BID or Chamber - can be extremely helpful, but pooling together resources and launching marketing campaigns that draw attention to businesses that are selling on-line. They can also enlist local colleges - a business school marketing class, for instance - can be a great opportunity for businesses to get help they need from savvy young people looking for real world experience and the social media know how necessary to build on-line awareness of the website.

Enhance the experience
As we have written about before, (see How can downtown remain competitive in the face of online shopping?) malls are increasingly looking to round out retail offerings with experiential activities - things that, you guessed it, cannot be accomplished on-line.  The Palisades Mall, a super-regional mall outside of New York City has built a ropes course in what used to be an open atrium.

In this time of rapidly evolving shopping habits, small businesses are being challenged. Those that succeed will be the ones that continue to embrace new ways to meet customer needs through high quality service, on-line purchasing options, and an unrivaled in person experience that allows a shopper to touch and feel the merchandise. The goods news is that these are things that our downtown merchants are poised to offer in spades.

On-Line Selling - an Option for Smaller Businesses?

Image source: www.forbes.com/sites/samsungbusiness/2015/02/09/

It wasn't long ago that many predicted the death of the brick-and-mortar store at the hand of the on-line retailer. However, recent research conducted by the International Council of Shopping Centers (ICSC) finds that the relationship between on-line retail and physical stores is becoming more intertwined. In fact, retailers with robust "omni-channel" strategies, i.e. those backed by physical stores in addition to on-line platforms, generated the most on-line sales. As the report points out, physical stores are still central to the whole enterprise, but they are increasingly used in conjunction with other product delivery methods and serve to enhance retailers image in their trade area.

Housingworks, a New York based non-profit that operates a small chain of thrift stores,
has set up a dedicated on-line auction platform. 

Large retailers continue to expand their omni-channel retail presence in a variety of ways including ‘buy online and pick up/return to the store’ features that are increasingly popular. But the ability to omni-channel is no longer limited to deep pocketed big businesses. In this post we explore options available to smaller retailers who want to offer customers multiple ways to buy their goods, including from the comfort of their own homes.

While the decision to sell on-line is one made by the retailer, commercial district practitioners can help their businesses by informing them of their options for selling on-line and helping market and promote those businesses that already have on-line sales platforms.

Option #1: Creating a dedicated website 

While selling on a dedicated website requires a higher investment of time and resources, it can be a worthwhile effort that allows for a greater level of control and branding by the retailer. Below are some of the most popular platforms being used today. 

Wordpress - WordPress is a well-known and very user-friendly platform that allows small businesses to set up a great looking website in a very short time, as well as customize it to suit their needs without detailed programming knowledge. The standard payment option with this is PayPal. Going through PayPal requires a bit of extra effort on the part of the shopper, so those looking to sell quickly could check out plugin options like WooCommerce or Selz at an additional cost.

Wix - is a cloud-based web development platform that allows small businesses to create web sites and mobile sites through the use of online drag and drop tools. Their beautiful templates are customized for a variety of business types (from eating establishment to beauty salons, among many others) which include particular features that are useful for each business type (for example, restaurant templates come with online ordering and reservation options). The platform includes some interesting features such as text and writing help from professional writers for the website content, and the inclusion of video backgrounds in the website.

A nice looking template for a coffee shop website from Wix

Bigcommerce -  is a little different from Wix and Wordpress as it consists of a comprehensive ecommerce solution for small businesses that integrates multiple points of sales (POS). This means that besides creating a website and selling from it, Bigcommerce offers a platform for merchants to also sell through social media (on their Facebook page, on Pinterest, etc.), as well as on their physical stores or in fairs, pop ups or markets. Some interesting features include the analytic reports which give business owners insights of sales trends, and a customer profile section that allows business to learn about their customers and shopping habits.

Square Market -  similarly to Bigcommerce, Square Market consists of a comprehensive ecommerce solution to sell online, which can be through the business own website or with third party e-commerce sites, as well as in physical stores, fairs and markets. The platform is also customized for particular business types and includes beautiful but limited template options. Its analytic reports are a great feature as its ability to integrate inventory control between online and offline sales.

Shopify - is  quickly becoming one of the most popular ecommerce platforms in the market. Similarly to Bigcommerce and Square Market, it consists of a multi-channel commerce platform designed for small and medium-sized businesses. Merchants use the software to design, set up and manage their stores across multiple sales channels, including web, mobile, social media, marketplaces, brick-and-mortar locations and pop-up shops.

Leif is a retail website powered by Shopify

Option #2: Using an Existing Online Platform

On-line marketplaces are popular plug-and-play options with many retailers. Below are some of the most popular options.

Amazon - The most visited on-line marketplace selling products from chain stores and international sellers. Includes bulk-listing and reporting tools and ability to have fulfillment handled by Amazon for an additional cost.

Ebay -  a shopping and online auction that allows businesses to sell a broad variety of goods and services worldwide.  It is the second most visited on-line marketplace after Amazon. In addition to its auction-style sales, the website has expanded to include "Buy It Now" shopping. The website is free to use for buyers, but sellers are charged fees for listing items and again when those items are sold.

Etsy - Another very popular marketplace, Etsy focuses exclusively on handmade products and offers retailers an on-line platform that has significant reach. International sellers allowed. Includes shopping cart and image library.

Etsy's product display offers multiple filters that optimize product search and make navigation extremely easy.

Bonanza -  An increasingly popular marketplace, Bonanza sells new and used products mostly from popular brands. Includes photo-editing tools, image library, batch editor, and more. The website and searching tools are less attractive and user-friendly than the more famous online marketplaces.

Storenvy - An on-line marketplace focused on indie brands. Includes inventory and order tracking, visitor stats, mobile friendly component, and image library. Free to open, but extras, like domain support, promo codes, and more will cost various fees. The website is very user-friendly, but its search filter options are quite limited, which makes finding specific products inconvenient for shoppers.

OpenSky - Another online marketplace focused on indie brands. It includes simple management tools, unlimited product listings, and mobile optimization. Extremely user-friendly with several filters that optimize product search and display.

It is worth noting that these options are not mutually exclusive - businesses can have both a dedicated website and offer their products on Esty, Ebay or any other marketplace seller. Selling in multiple places can open business up to consumers that local merchants may have never reached otherwise. Establishing an on-line presence is also a great marketing strategy and may also help boost foot traffic and sales at physical stores (and in your district).

While the time requirements of running a small business may make it difficult for some merchants to consider selling on-line, commercial district practitioners can play an instrumental role in encouraging and providing information for merchants who might be willing to take the next step. 

Patricia Voltolini, PhD is a Senior Associate at Larisa Ortiz Associates. 

Roundup: "Brick & Mortar is Dead," Right Turns on Red, Local Loyalty, Grocers Disappearing Act, Neon Heaven

Brick & Mortar Is Dead

A short, graphic and infographic heavy, article regarding e-commerce's continued dominance over in-store shopping.  It introduces new terms "showrooming" and "webrooming" - I for one am guilty of showrooming. It also spotlights how brick and mortar stores are taking on new on-line connected purposes and highlights the rise of young global digital buyers.

It’s Time for U.S. Cities to Ban Right Turns on Red

Cars making right turns on red lights are becoming increasingly dangerous to pedestrians. NYC already bans RTOR and other cities are catching on to the policy to reduce unnecessary pedestrian deaths.

How Much Loyalty Do I Owe My Local Shops?

Point and counterpoint by CityLab staff regarding whether we should feel guilty for abandoning your local shop for an equivalent new one. They have good points to both sides.

Map: New York City's Disappearing Grocery Stores

Curbed NY gives you an interactive map of the growing number of NYC grocery stores that have shuttered in the last few years. These closures aare leaving some neighborhoods without an affordable option for groceries—or any option. They point out that many factors have led to these closures and a majority are in Brooklyn.

And in other news...
There’s A Neon Warehouse In London And It Is Basically Heaven
If your district could use the soft cool glow of neon, may we suggest this place.

Nine hot trends that the retail real estate industry can expect in 2015

We really enjoyed Joel Groover's article in the most recent Shopping Centers Today covering nine "hot topics" he identified after surveying experts in the industry.  Commercial district managers take note! Could some of these trends make their way to your district?

1. More Mobile Tech and E-Commerce - The continued rise of Internet users worldwide coincides with the ability to capture and use data in ways that improve overall performance. The article goes as far as to note the ability to track customer movement inside malls and stores to gather information - is this move overstepping privacy though?
2. More Redevelopments of Well-Located Properties - A lot of capital investment is being leveraged against redevelopment of strategically located properties that have the investors cool as cucumbers because the demand for good real estate is so high.
3. Continued Growth of Fast-Casual Dining - Sales among fast-casual dining establishments increased 11% from 2012 to 2013 and are expected to continue.  Baja Fresh, Chipotle, Panera Bread, and Qdoba are all lumped into the lot of fast-casual as well as Shake Shack who's recent IPO sold 5 million shares. Fast-casual, as I see it is a step above fast-food, which Americans are slowly recanting from. But don't take our word for it, just take a look at what's been happening to McDonald's lately..."As sales dip, McDonald's is replacing Don Johnson as chief", NYTimes, 1/28/15. So here is our question for you...what is your mix of food offerings and is fast-casual dining part of your retail mix? If not...it probably should be. 
4. More Subleasing of Retail Space - Basically a store or brand within a store or brand. This is expected to increase in 2015. Large-format retailers are turning to creative sublease solutions amid the trend toward downsizing.
5. More Solar Arrays on Shopping Center Rooftops - Companies, mostly big box stores, are seeing solar as a way to turn underused land and rooftops into productive assets while also impressing environmentally friendly consumers.
6. Healthier Employment and Consumer Spending - The article relates lowered energy, i.e. oil prices, to savings for employers and consumers who will spend the money saved on gas.  This equates to, among other things, more hiring by employers.
7. More Same-Day Delivery - As Amazon has notably taken the charge toward same-day delivery, other retailers such as Macy's and Target have also rolled out same-day delivery for select markets of time-stricken consumers. But only 9% of consumers surveyed "cited same-day delivery as a top factor that would improve their online shopping." This means that while delivery remains important, people still want to go to stores to purchase. That's good news for downtown. 
8. New Initiatives to Recapture Coveted Spaces - Like putting a peg in a hole, retailers are adjusting their size to fit into more appropriate and more coveted spaces as they "right-size" their portfolios. Some of the retailers taking space include Nordstrom Rack, Sprouts, Trader Joe's, and Whole Foods. Looks like luxury bargains and specialty food are taking advantage of these opportunities.
9. More Retailer Spin off Concepts - Spin off concepts ideally allow established retailers to capture interest of new demographic groups and enter normally inaccessible markets. For example Space Ninety8, an Urban Outfitters concept store, opened in normally chain unfriendly Williamsburg, Brooklyn. COS by H&M spins off higher luxury while F21 Red is lower priced than it's spin off parent, Forever 21. Could some of these spin offs find their way to your district?

Credit: This post was developed in part an article in SCT (“Nine Hot Topics For 2015,” Jan. 2015).